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Lucara Diamond (TSX: LUC) announced a successful start to 2024 as it sold about 12% more diamonds from its Karowe mine in Botswana than in the first quarter of 2023 and operating costs decreased by 2%.
The Canadian miner’s revenue during the period was slightly lower in first the three months of the year than in the same quarter last year — down to $41.1 million from $42.8 million.
Chief executive William Lamb qualified the results as positive, given the current market conditions that have dragged rough diamond prices down. He attributed the outcome to a combination of the timing of production and quantity of large diamonds unearthed so far this year.
Lucara kicked off 2024 with the recovery of a 166-carat Type IIa diamond, which was followed by a 320-carat top light brown gem quality stone and a 111-carat one.
The Vancouver-based company inked in February a new sales deal with polishing and trading company HB Antwerp from Karowe. The parties had cut ties in September, following what Lucara called “material breach of financial commitments” by HB.
The underground expansion of Karowe is expected to start commercial production in early 2028
The new 10-year agreement covers all qualifying diamonds found at Karowe larger than 10.8 carats, the company said.
Work on the underground expansion project at the iconic mine also progressed well during the quarter, Lucara said, with production from the new mine section expected in early 2028.
Lucara said that while the diamond market remained relatively stable in Q1, it observed some cautious sentiment due to the broader macroeconomics, including high inflation and interest rates, which has impacted consumer demand in certain regions.
The growing popularity and affordability of laboratory-grown diamonds is seen as the main contributor to the current challenges faced by the diamond market.
Top producers, including Anglo American’s de Beers and Russia’s Alrosa, have been cutting output to reduce excess inventory.
Lucara said that despite the hype around man-made diamonds, fundamental supply and demand dynamics continue to favour mined stones over the long term, as new mine supply remains constrained.
